Story of Benjamin F. Kuo
For today’s interview, we spoke with Joe bayen, CEO and founder of the Los Angeles-based company Increase credit (www.growcredit.com), which runs a fintech startup that allows you to pay for your subscriptions via a free Mastercard, in order to increase your credit score. The company’s backers include Mucker Capital and Commerce Capital, as well as angel investor Minal Hasan, of K2 Global Ventures.
For those unfamiliar with Grow Credit, talk about what your service does?
Joe Bayen: Grow Credit is the premier platform for consumers to build credit, for free, using their subscription payments for services like Netflix, HBO, and more. We soon plan to allow our users to create credit with their mobile plan as well, whether it’s AT&T, Verizon, Sprint or T-Mobile.
How long has the service been in existence?
Joe Bayen: We officially launched the platform, with our free version, in December 2019. Last week we released our premium plans nationwide. It’s a big event for us, and our performance has been fantastic. We also entered into a partnership with Mastercard, where we signed a co-branding partnership with them last August. Mastercard will support us in our growth as we expand nationally.
What is the difference between your free and premium plans?
Joe Bayen: The free plan limits consumers to $ 15 per month that they can use for their Netflix or Spotify accounts. They use this plan to pay for subscriptions. What’s interesting about this is that we report them as installment loans, so over one year it’s a $ 180 loan reported to the credit bureaus. Our service works just like a charge card, like you would an Amex card or whatever, where a user has to repay that amount on the 10th of each month. The premium plan increases the amount you can bill, our $ 4.99 plan lets you bill up to $ 50 per month, and our $ 9.99 plan lets you bill up to $ 150 per month, and we apply those funds directly to your cell phone or cable bill, or other subscriptions. We also plan to add DirectTV next month. The difference between the plans is that the amount you can charge them is more restricted in the free version than in a premium subscription.
How do the credit bureaus view the loan reports you make?
Joe Bayen: We are a financial inclusion platform, which is why we have partnered with Mastercard. They are committed to helping minorities, and in particular they have an effort to help the black community. This is where we have a common vision. We were created, primarily, to help students, millennials and underprivileged populations in the United States. How we deal with credit bureaus, do we operate between a secured credit card and an unsecured credit card. We are extending an unsecured loan, which is issued via a virtual Mastercard. The distinction between this and a platform that reports rent, or something like Experian Boost, is that those platforms only report the repayment history to a credit bureau, which has a fairly minimal impact on the credit scores that lenders review. There is no loan given to these consumers, so it is impossible to see if a consumer would go above and beyond. Because we are an actual loan and we extend credit to our users, there is a direct and profound impact on their credit score. Under a four-month plan, 81% of our users improved their credit score by 30 points. Experian Boost only delivers about 13 points. We have found that over time, users with no credit history see their credit score increase over nine months to between 620 and 720. We observe that users who switch to our premium plan see their credit score increase further. more than those of the freemium. plan. We are the first free platform that allows consumers to have a credit score on all three credit bureaus, which is different from something like Experience Boost, where the impact is only 13 points, and only impacts their score on one desktop, Experian. Our service has an impact on a user’s score on all three credit bureaus.
Are the users who use your service the ones who usually don’t already have a credit history?
Joe Bayen: We have all kinds of users. Before COVID-19, there were one hundred million users with no credit history. It has actually increased dramatically since the coronavirus crisis. We see all kinds of consumers without credit trying to increase their credit rating to buy a car or a house, and consumers coming out of bankruptcy are also trying to rebuild their credit. There is a large audience of over 100 million consumers who need to increase their credit.
How was the Mastercard partnership born?
Joe Bayen: It was a long process. We have been working with them for about a year. The reason we entered into our partnership is that they saw us go through a tremendous amount of hurdles to launch our platform and partner with the three credit bureaus. We also make sure, from the outset, that we work with several banking partners. We partnered with MRV Bank, we completed our partnership with Blue Ridge Bank, we expanded our service nationwide, all of that were strong validators for them. We were able to demonstrate that we can operate in a highly regulated environment and partner with several banks and the three credit bureaus. In the past year that they have followed us, we have essentially demonstrated that we can enter into and enter into partnerships, which has strengthened our position with them and made it easier to enter into the partnership. It was a long and fierce battle for such a great brand to support our initiative. Because financial inclusion is such a big part of what we do, it was a major win because it really helps us get consumers to trust our brand and grow faster.
How has the pandemic impacted your business?
Joe Bayen: We’re very unique, I’m sad to say, in that the pandemic has been good for our business. We have a lot of consumers who are unemployed and they still need to maintain their credit rating. More importantly, it has now been shown that during the pandemic, while most industries, such as spending on movies have gone down, music streaming and video have increased usage. Customers can cut their cable to recover some funds, but they don’t cut Netflix or Disney Plus. Our platform allows them to build up credit with their subscriptions, a major asset, and that makes a lot of sense in the current crisis.
Finally, what’s the next step for you?
Joe Bayen: Conquer the world! (Laughs). In fact, we’re going to be launching a graduation credit card with MRV Bank, a $ 500 credit card for our users who have been with us for a year. This will be available to them in the form of a physical and digital card, without any restrictions. The difference between this and the Grow card is that ours is limited to subscriptions. This will be a full-fledged physical and digital card, which you can use in any store, online or physical. Next year, we will partner with many companies to also offer Grow Credit as an employee benefit. These companies can offer Grow, and their employees can also upgrade to our premium plan and get a 20% discount. It is a win-win solution for employers and their employees, allowing their employees to boost their credit cards in a very efficient way. We plan to expand quite aggressively next year, with larger companies as well.
Thanks and good luck !